Correlation Between Dynamic Active and PHN Multi

Can any of the company-specific risk be diversified away by investing in both Dynamic Active and PHN Multi at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dynamic Active and PHN Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dynamic Active Dividend and PHN Multi Style All Cap, you can compare the effects of market volatilities on Dynamic Active and PHN Multi and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dynamic Active with a short position of PHN Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Active and PHN Multi.

Diversification Opportunities for Dynamic Active and PHN Multi

0.85

Correlation Coefficient

Dynamic Active  PHN Multi

Very poor diversification

The 3 months correlation between Dynamic and PHN is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Active Dividend and PHN Multi Style All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHN Multi Style and Dynamic Active is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dynamic Active Dividend are associated (or correlated) with PHN Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHN Multi Style has no effect on the direction of Dynamic Active i.e., Dynamic Active and PHN Multi go up and down completely randomly.

Pair Corralation between Dynamic Active and PHN Multi

Assuming the 90 days trading horizon Dynamic Active Dividend is expected to generate 1.46 times more return on investment than PHN Multi. However, Dynamic Active is 1.46 times more volatile than PHN Multi Style All Cap. It trades about 0.24 of its potential returns per unit of risk. PHN Multi Style All Cap is currently generating about 0.3 per unit of risk. If you would invest  5,589  in Dynamic Active Dividend on September 11, 2024 and sell it today you would earn a total of  878.00  from holding Dynamic Active Dividend or generate 15.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Dynamic Active Dividend  vs.  PHN Multi Style All Cap

Dynamic Active Dividend

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Active Dividend are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dynamic Active displayed solid returns over the last few months and may actually be approaching a breakup point.

PHN Multi Style

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Multi Style All Cap are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating basic indicators, PHN Multi displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dynamic Active and PHN Multi

The main advantage of trading using opposite Dynamic Active and PHN Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Active position performs unexpectedly, PHN Multi can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PHN Multi will offset losses from the drop in PHN Multi's long position.

The idea behind Dynamic Active Dividend and PHN Multi Style All Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.